Related Summaries

The Monetary Authority of Singapore recommended legislative changes to fortify its powers in dealing with the over-the-counter derivatives and securities markets. The MAS also decided it will not follow the lead of other jurisdictions in requiring more swaps trading to be conducted on regulated trading platforms.

Intercontinental Exchange is set to establish an over-the-counter interest-rate swap-clearing service next year, just as mandatory European buy-side clearing rules are launched, a source says. ICE, which is active in the trading and clearing of credit default swaps and energy derivatives, staked a position in interest-rate futures last year.

Asset managers will be required to keep records of negotiations related to over-the-counter swap deals starting May 1, unless the Commodity Futures Trading Commission offers relief. The CFTC's enforcement division says effective oversight of the swaps market requires access to buy-side records. End users, however, are raising concerns about the cost of compliance, saying it outweighs the benefits.

Some non-U.S. banks are not delivering data on over-the-counter swaps to data repositories as required by the Dodd-Frank Act, according to some U.S. buy-side firm executives. "You need to make sure all of your trading counterparties actually are doing the reporting for you -- don't assume it," said Richard Mazzella of Citadel. "What we've found in some pretty sizeable niche markets is that some dealers are claiming they are exempt from the regulation and they are not doing the reporting. And if no one is doing the reporting -- and you are a U.S. person -- then that's a problem."

Regulators are working to overhaul over-the-counter markets for currency, derivatives and bonds to shine a light on the shadowy industry. "The OTC market has historically been tied up between a handful of brokers and dealers, but the exchanges and other new entrants will look to move aggressively into these potentially higher-margin products partly because their core exchange-traded markets have become squeezed," said Simmy Grewal, a senior analyst at Aite Group.